Mobile ads may be a new e-cash cow

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Those looking for a new ad boom to supplement the softening Internet ad market are literally looking to the skies, hoping ads beamed to wireless devices will be the next growth area in digital marketing.

Ad and promotional content can be delivered to cell phones, two-way pagers, text-messaging devices and handheld units such as the Palm. But it's the potential to generate ad revenue that's driving all the hype. Jupiter Media Metrix estimates advertising via wireless devices will hit about $700 million by 2005.

But consumer acceptance of the medium could prove its biggest hurdle. A recent Jupiter study assessing the prospects for ads on non-PC platforms suggested 46% of consumers declined to accept ads on their cell phone or handheld organizer in exchange for financial incentives, though 36% agreed to accept ads for discounted access to content and airtime.

Such obstacles haven't slowed the wireless ad companies, which are barreling ahead on trials with marketers and wireless carriers such as AT&T Wireless, Nextel and US West. (See related story on this page). Companies that manage interactive ad networks, such as DoubleClick, 24/7 Media and Engage also are forming wireless ad networks of their own.


Among the raft of new companies scrambling to develop wireless ad networks is WindWire, a Morrisville, N.C.-based company that has built the WindCaster Network. It launched in September, targeting content providers, agencies and marketers, allowing them to create their own virtual networks of wireless publishers.

"We're able to serve ads, coupons and promotions across any device," said David Wilson, WindWire executive-VP and co-founder, claiming that the Network, built on Java, is the only national wireless ad network that works with any operating system and all types of browsers. The network delivered 2 million ads to consumers since October with a click-through rate of 15% and a call-through rate of 12%. In recently concluded trials, WindWire, with carrier GoAmerica, served wireless ads from marketers that included the National Hockey League's Carolina Hurricanes and Nike. Among WindWire's agency partners are Carat Group, a division of Aegis Group, London, and San Francisco-based interactive agency Lot21.


Wireless infrastructure providers also are hedging their bets in the space. Ericsson, for example, has a product for ad networks called Mobile Advertiser. Although it doesn't want to be in the ad business, the Swedish wireless giant is looking to influence the nascent market and in so doing, stimulate demand for its wireless network gear.

Indeed, there are various players eager to feed from the wireless ad trough. "I think you will see companies take a position in the food chain between media buyers and mobile portals and mobile operators," said Mats Eriksson, investment manager-content aggregation, Ericsson Business Innovation. "But I also believe that service providers focused on mobile advertising- linking the media buying side together with the mobile portal and mobile operator's side-are fulfilling a need."

Symbiotic relationships between all the parties involved are necessary for the medium to reach its potential, said Perry Allison, SkyGo's VP of strategic alliances. "Right now, carriers are really the gatekeepers because they own the relationship with the customer," Ms. Allison said, adding, "They're very cautious about it because anything that would impact their churn is something that they need to look really hard at before they do it."

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